Japan: Economy Update – May 2026

https://www.mfat.govt.nz/en/trade/mfat-market-reports/japan-economic-update

Japan’s economy saw moderate growth, estimated at 1.1%, during the 2025 financial year (April 2025-March 2026). There were some positive signs. Private consumption and business investment were robust, and real wages grew in January and February 2026, breaking 13 months of consecutive declines. However, inflation over the same period was above target rates of 2%, with core consumer prices growing by 2.6%.

The impact of conflict in the Middle East has yet to fully emerge in economic data. The government has said it would keep a close eye on the impacts of the conflict on Japan’s economy, with concerns about a decline in consumer confidence. Economic growth projections have been revised downwards while inflation projections revised upwards.

Total exports from New Zealand to Japan grew by 4.4% on an annual basis for the year ending December 2025. More recent goods exports data for the year ending March 2026 saw lower growth, at only 0.46%. Dairy, horticulture, forestry, and food and beverage exports grew while aluminium, meat and fisheries exports declined. Services trade is recovering but remains below pre-pandemic levels, with tourist numbers at 76.7% of pre-pandemic levels.